SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934; for the Quarterly Period Ended: March 31, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-24682
WORLDWIDE PETROMOLY, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1125214
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1300 Post Oak Boulevard, Suite 1985
Houston, Texas 77056
(Address of principal executive offices, including zip code)
(713) 892-5823
(Registrant's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
At May 25, 2000, 22,243,080 shares of common stock, no par value,
were outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [x]
<PAGE>
WORLDWIDE PETROMOLY, INC.
CONTENTS PAGES
- -------- -----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- -------------------------------
Consolidated Balance Sheets as of March 31, 2000 (unaudited)
and June 30, 1999 3
Consolidated Statements of Operations for the
three months and nine months ended March 31, 2000
and 1999 (both unaudited) 4
Notes to Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis
- -------------------------------------------------
of Financial Condition and Results of Operations 8 - 11
- ------------------------------------------------------
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
(a) Exhibits
(b) Reports on Form 8-K
SIGNATURES 13
2
<PAGE>
WORLDWIDE PETROMOLY, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
-------------- ------------
(Unaudited)
ASSETS
- ------------------------------------------------------
Current Assets:
<S> <C> <C>
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 449,831 $ 603,336
Accounts Receivable:
Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512,763 270,794
Affiliated Companies. . . . . . . . . . . . . . . . . . . . . . . . . 6,513 20,383
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,081 115,694
Prepaid Expense and Other . . . . . . . . . . . . . . . . . . . . . . 524,366 936,340
-------------- -------------
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 1,720,554 1,946,543
-------------- ------------
Property and Equipment, Net . . . . . . . . . . . . . . . . . . . . . . 80,536 102,523
-------------- ------------
Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,801,090 $ 2,049,066
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------------------------
Current Liabilities:
Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . . $ 362,481 $ 496,173
Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,625
-------------- ------------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . 362,481 499,798
Advances From Stockholder . . . . . . . . . . . . . . . . . . . . . . . 1,004,538 233,636
-------------- ------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,367,019 733,434
-------------- ------------
Stockholders' Equity:
Preferred stock, no par value, 10,000,000 shares
authorized, none issued . . . . . . . . . . . . . . . . . . . . . . . . -- --
Common stock, no par value, 800,000 shares
authorized; 22,243,080 issued and outstanding;
3,000,000 reserved for stock options. . . . . . . . . . . . . . . . . . 12,457,561 11,454,871
Accumulated Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . (12,023,490) (10,139,239)
-------------- ------------
Total Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . . 434,071 1,315,632
-------------- ------------
Total Liabilities and Stockholders' Equity. . . . . . . . . . . . . . . 1,801,090 $2,049,066
============== ============
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
WORLDWIDE PETROMOLY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES $ 248,755 $ 170,653 $ 748,298 $ 363,474
COST OF SALES 212,689 104,966 509,339 234,427
------------ ------------ ------------ ------------
GROSS PROFIT 36,066 65,687 238,959 129,047
SELLING, ADMINISTRATIVE
AND GENERAL EXPENSES 1,401,740 451,684 2,268,844 1,038,194
------------ ------------ ------------ ------------
(LOSS) FROM OPERATIONS (1,367,674) (385,997) (2,029,885) (909,147)
OTHER INCOME, NET 34,814 186,315 145,634 186,315
------------ ------------ ------------ ------------
NET (LOSS) $ (1,330,860) $ (199,682) $ (1,884,251) $ (722,832)
========== =========== =========== ===========
NET (LOSS) PER SHARE $ (.06) $ (.01) $ (.09) $ (.04)
========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 21,763,080 17,537,237 21,350,581 17,925,147
========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
WORLDWIDE PETROMOLY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
2000 1999
------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS (1,884,251) $ (722,832)
ADJUSTMENTS TO RECONCILE
NET LOSS TO NET CASH USED
IN OPERATING ACTIVITIES:
DEPRECIATION 33,629 22,633
COMMON STOCK ISSUED FOR SERVICES 902,690 --
CHANGES IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE (228,099) (20,229)
INVENTORIES (111,391) (9,069)
PREPAID EXPENSE AND OTHER ASSETS 411,972 (284,704)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (137,317) 253,368
---------- -----------
NET CASH USED IN OPERATING ACTIVITIES (1,012,765) (760,833)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
CERTIFICATES OF DEPOSIT -- 276,579
CAPITAL EXPENDITURES (11,642) (6,276)
RELATED PARTY LOAN REPAYMENTS -- 12,000
---------- -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (11,642) 282,303
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM OPTIONS EXERCISED -- 527,300
PROCEEDS FROM SALE OF COMMON STOCK 100,000 359,664
BORROWING FROM SHAREHOLDER LOANS 770,902 232,373
PAYMENT OF NOTES PAYABLE -- (160,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES 870,902 959,337
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (153,505) 480,807
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 603,336 34,375
---------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 449,831 $ 515,182
---------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION AND BUSINESS
Worldwide PetroMoly, Inc. (the "Company"), a publicly-held Colorado
corporation, is engaged in the marketing and distribution of a line of engine
lubrication products under the tradename "PetroMoly". The company was formed as
a result of a reverse merger on July 22, 1996, between Ogden, Mcdonald & Company
("Ogden Mcdonald" the former name of the registrant with the securities and
exchange commission) and Worldwide PetroMoly Corporation ("WPC"). Ogden Mcdonald
was incorporated in the state of Colorado on October 13,1989, and became a
public "shell" company for the purpose of engaging in selected mergers and
acquisitions. WPC was incorporated in the state of Texas on April 1, 1993, and
prior to the reverse acquisition, was engaged in the same line of business as
the company. In connection with the reverse merger, Ogden Mcdonald acquired all
of the outstanding common stock of WPC, and subsequently changed its name to
Worldwide PetroMoly, Inc. WPC is now a wholly owned subsidiary of the company.
The company contracts with independent parties for the blending of its lubricant
products.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited financial statements of the company and its
wholly-owned subsidiary WPC have been prepared in accordance with the
instructions and requirements of form 10-QSB and, therefore, do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, such financial
statements reflect all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results of operations and
financial position for the interim periods presented. Operating results for the
interim periods are not necessarily indicative of the results that may be
expected for the full year. These financial statements should be read in
conjunction with the company's annual report on Form 10-KSB.
Note 3 - LOSS PER SHARE
Using the principles set forth in SFAS 128, basic loss per share includes
no dilution and is computed by dividing loss available to common stockholders by
the weighted average number of common shares outstanding for the period.
Dilutive earnings per share reflects the potential dilution of securities that
could share in the earnings of the company. The company was required to adopt
this standard in the second fiscal quarter of 1998. Using the principles set
forth in SFAS 128, basic and diluted earnings per share are identical.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information Regarding and Factors Affecting Forward-looking Statements of future
events or circumstances.
The Company is including the following cautionary statement in this Form
10-QSB to make applicable and take advantage of the safe harbor provision of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance and underlying assumptions and other statements which are
other than statements of historical facts.
<PAGE>
Certain statements in this Form 10-QSB are forward-looking statements. Words
such as "expects", "anticipates", "estimates" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those projected. Such risks and uncertainties are set forth below. The
Company's expectations, beliefs and projections are expressed in good faith and
are believed by the Company to have a reasonable basis, including without
limitation, management's examination of historical operating trends, data
contained in the Company's records and other data available from third parties,
but there can be no assurance that management's expectation, beliefs or
projections will result, be achieved, or be accomplished. In addition to other
factors and matters discussed elsewhere herein, the following are important
factors that, in the view of the Company, could cause material adverse affects
on the Company's financial condition and results of operations: market
acceptance and demand for the Company's products, competitive factors, the
ability of the Company to obtain acceptable forms and amounts of financing. The
Company has no obligation to update or revise these forward-looking statements
to reflect the occurrence
RESULTS OF OPERATIONS -GENERAL
In the third fiscal quarter of the year 2000's operation, the Company has
continued to refocus various aspects of its marketing approach and the Company's
infrastructure. The focus has been on expanding and improving the product lines
and developing retail lines of distribution to enhance sales volume, spending
the appropriate and necessary amount of capital for additional product
certification and quality control, and continuing its new concepts that further
display the Company's technology and product lines in new markets as well as
strengthen existing markets. The two areas of primary focus have shifted from
last year's concentrated strategy, which was the commercial and industrial
market, to the retail/passenger car market.
Management's strategy to gain retail acceptance and credibility was launched in
1999 by its specially formulated Moly racing-oil, designed for INDY style
motors, which was tested last year, and used by veteran driver Robby Unser who
introduced PetroMoly's successful debut in the 1999 Indy Racing League (IRL),
including an eighth place finish at the Indianapolis 500, and a second place
finish at the league's Atlanta race. This quarter, the racing activities have
continued in an attempt to enhance the Company's image in the retail market
place, by setting the tone of which the Company's top of the line products are
to be exposed to the market. Also, the Company continued its product
development by successfully focusing on applying the proprietary technology to
market new products such as high performance gear oil treatment and straight
track oil for competition drag racing engines. The company has continued its
development of cutting oils for threading, armament oil to private label, a
two-cycle engine oil additive for motorcycles and outboard motors, a
<PAGE>
moly-grease, an emissions reducing fuel treatment, and now has nationwide
distribution of its very effective oil additive called PetroMoly Oil Treatment
designed for automobiles and light trucks. The Company presently has a
distribution/purchase agreement with PEP Boys; "the nations leading automotive
retail and service chain" for the oil treatment, and the Company has plans to
introduce its family of products through this same distribution channel. So far
the sales results have been slow to mature. This quarter the Company has
invested in advertising spots for various strategic markets by airing
sixty-second radio ads that are aimed at creating brand awareness. Management
believes that the awareness that is anticipated will aide the company to gain
market share in both the retail and commercial/industrial sectors in these
strategic markets.
This quarter the Company has invested in additional research and development to
further test the limits of its proprietary technology in the areas of fuel
savings, engine metal ware reduction, and various environmental benefits. The
Company has continued field testing and objective independent lab testing of its
fully formulated engine oils, while several major multinational customers
continue evaluation tests of the PetroMoly products on their complex high-end
machinery and fleet vehicles. These tests have been complex and time consuming,
and the results have established the effectiveness of the PetroMoly products.
Management continues to anticipate increases in revenue and the size of the
customer base related to contracts and agreements in the foreseeable future.
THREE MONTHS ENDED MARCH 31,2000, COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
- --------------------------------------------------------------------------------
Total net sales for the three months ended March 31, 2000 were $248,755 as
compared to $ 170,653 for the three months ended March 31, 1999, a 45%
increase. The reason for the increase is credited to Management's decision to
expand into retail markets in the last three quarters of fiscal 1999 versus an
earlier strategy to concentrate the sales resources on procuring a few large
industrial customers that are known industry leaders. Sales discounts and
selective sampling of products, together with long attentive testing periods
continued to be practiced to educate the strategic customers about the new
lubricant technology. Year to date sales for this period in fiscal 2000 are
$748, 298 compared to $363,474 for this same nine-month period in fiscal 1999.
The Company continued to benefit from publicity from its association with
Continental Airlines, and this has led to discussions and testing with other
industry related companies. This quarter, the Company's distributor in
California, EFFS, has ordered additional bulk shipments at discounted cost in a
continuing joint effort with the Company to expand its market share in
industrial fleets as well as retail shipments. The Company continued to receive
a considerable amount of attention from the IRL racing sponsorship, and racing
results of racecars using PetroMoly products. Management believes that the
present sales and marketing strategy will reward the Company with increased
revenues, PetroMoly product awareness and fiscal commitments.
<PAGE>
Cost of sales as a percentage of net sales was increased from 61% for the three
months ended March 31, 1999, to 86 % for the three months ended March 31, 2000.
This quarter's gross margins' average were significantly skewed down by the
temporary promotional bulk discounts with the Company's distributors in an
effort to expand to new industrial markets. The margins consisted of several
factors which include: the Company's negotiated costs of production with its
suppliers as well as freight rates for distribution; profit margins on its oil
treatment products; and expanded services to its customers such as promotional
activities in the racing market, that generate revenue with a very low cost of
sales. A more consistent margin is seen in the nine months ended comparisons,
which are 68% for the nine months ended March 2000 versus 65% for the same
period in 1999. A drop in costs is expected in future periods due to the
economies of scale with management's anticipated increased volume production
runs. The demand associated with the caliber of customers that the Company has
been targeting, as well as the projected increase in retail demand from the
anticipated brand awareness campaign could qualify the Company for a decrease in
the cost of production runs with only a few, or in some cases one, consummated
commitment.
Selling, general and administrative expenses increase to $1,401,740 for the
three months ended March 31, 2000, from $ 451,684 for the three months ended
March 31, 1999. The increase in expenses was mainly due to research and
development, promotional and racing expenses, along with the marketing expenses
associated with the advertising and awareness campaign and common shares issued
for services during the period.
LIQUIDITY AND CAPITAL RESOURCES.
At March 31, 2000, the Company had positive working capital in the amount
of $1,358,073, including $524,366 in prepaid expense, as compared to working
capital of $1,446,745 at June 30, 1999.
Operating activities for the six months ended March 31, 2000 used cash of
$1,012,765 compared to $760,833 for the six months ended December 31, 1998.
This use of cash was principally the result of the Company's net loss, less the
modification for the changes in operating assets and liabilities, principally
prepaid expenses and accounts payable. Also the payment of notes payable was
$160,000 in March ended 1999 compared to $- in March ended 2000.
As of March 31, 2000, the Company had no material commitments for capital
expenditures.
At March 31, 2000, the Company has recorded a full valuation allowance against
all deferred tax assets because it could not determine whether it was more
likely or not that the deferred tax asset would be utilized.
For the three months ended March 31, 2000 and 1999, the Company incurred
net losses totaling $1,330,860 and $199,682 respectively. In the event that the
Company is unable to generate sufficient revenues from operations, or is unable
to obtain additional financing, it may be unable to continue to develop and
support its present cost levels and continue as a going concern. The Company is
presently seeking to raise additional equity through the sale of its common
stock for financing to develop a professionally developed brand awareness
advertising campaign and to expand its marketing efforts in order to generate
additional revenues. No assurance can be given that the Company will be
successful in achieving its revenue growth strategy; or that it will obtain
financing at terms that are acceptable to the Company.
<PAGE>
THE YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs and hardware with
embedded date technology (embedded chips) using two digits to define the
applicable year rather than four digits. Any programs or hardware that are time
sensitive and have not been determined to be Year 2000 compliant may recognize a
date using "00" as the year 1900 rather than the year 2000. Such improper date
recognition could, in turn, result in erroneous processing of data, or, in
extreme situations, system failure.
The Company is currently implementing a Year 2000 program which encompasses
performing an inventory of information technology and non-information technology
systems, assessing the potential problem areas, testing the systems for Year
2000 readiness, and modifying systems that are not Year 2000 compliant.
To date, inventory and assessment are in progress for all core systems that are
essential for business operations. The Company believes all of its core systems
are Year 2000 compliant. The Company's management estimates that the work they
have completed represents more than seventy-five percent of the work involved
preparing the Company's systems for the Year 2000.
Although the Company was and remains ready to continue business activities
without interruption by a "Year 2000 problem", Company management recognizes the
general ongoing uncertainty inherent in the Year 2000 issue, in part because of
the uncertainty about the Year 2000 readiness of third parties. Under a "worst
case Year 2000 scenario", it may be necessary for the Company to temporarily
interrupt normal business activities or operations. The Company has begun, but
not yet completed, development of a contingency plan to deal with the most
likely worst case Year 2000 scenario".
Based on a current assessment, the Company's total cost of becoming Year
2000 compliant is not expected to be significant to its financial position,
results of operations or cash flows and is estimated to be less than $10,000.
There can be no assurances that the Company will not experience serious,
unanticipated negative consequences and/or material costs caused by undetected
errors or defects in the technology used in its internal systems or in the
technology used by its venders or customers. The occurrence of any of the
foregoing could have a material adverse effect on the Company's business,
operating results or financial condition. The Company has taken additional
steps in sending out questionnaires to its vendors and major customers
concerning their respective Year 2000 compliance status. So far all major
accounts, both vendors and customers have reported that they do not anticipate
any material adverse effect on the Company's on-going servicing relationships.
<PAGE>
To date the company has not experienced any problems associated with Year 2000
programming issues.
OUTLOOK
During the past two quarters the Company has laid the groundwork to begin
its strategic focus of expanding to the development of a retail approach that
encompasses a brand and product awareness campaign in key markets. This approach
is expected to increase sales volumes and promote relationships with automotive
after-market chains while enhancing our presence with the leaders in the
industrial markets, which are end users, or already have established lines of
distribution and marketing capital. The brand awareness began with the INDY
race car/Robby Unser sponsorship and it has been very well received by the
various automotive retail chains that the Company wants to carry its PetroMoly
Products. The media campaign has already began in several key markets, and will
roll out to other markets over the next two quarters providing the capital is
available.
Management also continues to plan for its technology to be used by other
existing brands, in the form of licensing, additive supplier or otherwise. This
plan requires an additional investment in both time and finances as the
completed packages have demands that extensively demonstrate answers to
marketability, and liability concerns. The Company is presently exploring
various methods to satisfy various issues that a strategic alliance may present
in effort to enhance the plausibility of such. Management believes the issues
at hand are easily resolved and also believe that a potential alliance would be
viewed positively by the investment community and likewise may translate to
greater shareholder value.
With the progressing sales relationships maturing and the new product lines
being marketed, the Company expects operating margins and revenues to improve
during fiscal 2000.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Worldwide Petromoly, Inc. and Subsidiaries
We have reviewed the accompanying balance sheets of Worldwide Petromoly, Inc.
and Subsidiaries as of March 31, 2000, and the related statements of income for
the three month and nine month periods then ended and the statement of cash
flows for the nine month period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of analytical procedures applied to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Worldwide Petromoly, Inc. and Subsidiaries as of
June 30, 1999, and the related statements of operations and cash flows for the
year then ended (not presented separately herein), and in our report dated
September 17, 1999, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of June 30, 1999, is fairly stated, in all material respects,
in relation to the balance sheet from which it has been derived.
Jackson & Rhodes P.C.
Dallas, Texas
May 21, 2000
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities
During the three months ended December 31, 1999, there were no transactions
that were effected by the Company in reliance upon exemptions from registration
under the Securities Act of 1933 as amended (the "Act") as provided in Section
4(2) thereof.
SIGNATURES
In accordance with the requirements of Section 13 of 15(d) of the Exchange
Act, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on May 22, 2000
Worldwide PetroMoly, Inc.
2000 By: /s/ Gilbert Gertner
Gilbert Gertner
Director and
Chairman of the Board
Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons in the capacities and on the dates
indicated:
2000 By: /s/ Gilbert Gertner
Gilbert Gertner
Director and
Chairman of the Board
2000 By: /s/ Lance Rosmarin
Lance Rosmarin
Director, President,
Secretary and
Chief Financialand Accounting Officer
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 449831
<SECURITIES> 0
<RECEIVABLES> 512763
<ALLOWANCES> 0
<INVENTORY> 227081
<CURRENT-ASSETS> 1720554
<PP&E> 152912
<DEPRECIATION> 102376
<TOTAL-ASSETS> 1801090
<CURRENT-LIABILITIES> 362481
<BONDS> 0
0
0
<COMMON> 12457561
<OTHER-SE> (12023490)
<TOTAL-LIABILITY-AND-EQUITY> 1801090
<SALES> 248755
<TOTAL-REVENUES> 248755
<CGS> 212689
<TOTAL-COSTS> 1401740
<OTHER-EXPENSES> (34814)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1330860)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1330860)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1330860)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
